The US Securities and Exchange Commission (SEC) rejected digital asset management firm Grayscale’s application to convert Grayscale Bitcoin Trust (GBTC) to a spot Bitcoin ETF on June 29. The SEC justified its decision on Grayscale’s application rejection by pointing to problems such as the absence of a surveillance-sharing agreement between a “regulated market of sufficient scale” and a regulated exchange, market manipulation, and Tether’s place in the greater bitcoin ecosystem. These concerns are similar to those the regulator has previously raised in rejecting other spot bitcoin ETF applications over the years.
However, Grayscale expressed disappointment and stated that the corporation did not agree with the decision. Grayscale indicated they were considering suing the SEC.
Grayscale, on their official twitter handle, has announced that its team has sent a Petition for Review to the D.C. Circuit Court of Appeals on June 30. With this petition, Grayscale has formally opened a legal proceeding to challenge the SEC’s ruling.
Our team has filed a Petition for Review with the D.C. Circuit Court of Appeals. This document officially initiates a lawsuit contesting the SEC’s decision.
— Grayscale (@Grayscale) June 30, 2022
Michael Sonnenshein, Grayscale CEO, stated in a Grayscale Investment blog post:
“Through the ETF application review process, we believe American investors overwhelmingly voiced a desire to see GBTC converted to a spot Bitcoin ETF, which would unlock billions of dollars of investor capital while bringing the world’s largest Bitcoin fund further into the U.S. regulatory perimeter.”
Sonnenshein tweeted:
We’ve filed a lawsuit against the SEC. $GBTC
— Sonnenshein (@Sonnenshein) June 30, 2022
Donald B. Verrilli, Jr., Grayscale Senior Legal Strategist and former U.S. Solicitor General, also remarked:
“As Grayscale and the team at Davis Polk & Wardwell have outlined, the SEC is failing to apply consistent treatment to similar investment vehicles, and is therefore acting arbitrarily and capriciously in violation of the Administrative Procedure Act and Securities Exchange Act of 1934.”
We remain committed to working proactively with regulators.
But, now we will turn our attention to working with the Judicial branch.— Grayscale (@Grayscale) June 30, 2022
Grayscale’s chances of winning this lawsuit are unknown because no corporation that sells digital assets has ever taken such a step. However, this lawsuit will make the SEC vulnerable to all kinds of investigation and discovery.
Read more:
- Grayscale Investments files registration statement with SEC
- Grayscale all set to launch its first European ETF
